Amsterdam School of Economics

David Smerdon: ‘Theoretical models can help create interesting policy suggestions’

28 June 2017

David Smerdon had a clear goal when he swapped the Australian Treasury for the UvA: improve his knowledge of economics to do a better job in public policy. Mission more than accomplished. His thesis on the relationship between behavioural and development economics provides insights into three highly relevant topics.

‘I’ve always been a very ambitious sort of guy, and I knew these PhD years were very important for my training… I really wanted to get the full use of my PhD time. These three ess­ays are a mixture of topics that are really important to me and they enabled me to use different research tools’, says the 32-year old Australian in a phone interview the week after defending his thesis.
Thanks to the knowledge and experience gained while working on his three research topics, Smerdon no longer depends on other scientists’ research to find solutions to problems faced by public policy makers. On the contrary: the man who once ignored the part about the mathematical models in scientific papers has turned into a strong advocate of using a range of research methods, and he appreciates how mathematical models can help put the spotlight on the salient aspects of his findings.

Common denominator

Although the topics in his thesis all have to do with behavioural economics, at first sight they seem to have little in common beyond that. Smerdon developed a theoretical model to study why some social norms that have become inefficient, or even damaging, persist over time. He investigated the impact of refugee resettlement on aspects such as the local population’s level of trust and their attitude towards refugees more generally, and he looked into the reason why there is lower trust among individuals in societies where economic inequality is high.
However, all these topics have a common denominator, he points out: ‘All topics focus on the way people in society react to different things.’ Each project was born out of an interesting question about a topic with important policy implications, adds Smerdon, who majored in mathematics, psychology and statistics at the University of Melbourne. He has also worked on financial market regulation and foreign aid at the Australian Treasury before getting his PhD in Amsterdam.

Refugee resettlement and integration

One of the questions Smerdon examined involves the social impact of refugee settlement. ‘Everyone can understand the importance of this topic and everyone has an opinion about it. But there has never been any research done on it.’ Together with fellow UvA researcher Sabina Albrecht, he carried out a case study in a country town of 2.000 residents in rural Australia, where 200 refugees settled. The village was in need of workers, enabling the researchers to test the direct effect on locals’ social capital without the labour market pressures that often blur analyses. Combining data from the case study with analyses of data from both the host town and demographically and economically similar control towns, they found no evidence of negative social effects on the host community. ‘Contrary to what one might have expected, the attitude and trust towards refugees even improved.’
The pair continues to do further research to make the results stronger. Ultimately, their findings could encourage policy makers to consider a general principle in which refugees are resettled in areas where there is a demand for workers, Smerdon thinks. ‘In many host countries, there are villages whose population is shrinking, and sometimes there are problems finding workers.’

‘Bad’ social norms

In another field Smerdon elaborates upon – the emergence and persistence of detrimental social norms - concrete steps are already being taken. Smerdon developed a theoretical model that incorporates, among other things, the role of social identity and social payoffs in people's decision whether or not to comply with a norm. ‘Once you’ve found a unifying theory (in this case explaining why a detrimental social norm like female genital mutilation can persist within a group, red.), you can come up with general principles to break it down.’ The results suggested among others that facilitating anonymous communication might help counter detrimental norms.
In collaboration with Smerdon and researchers of Milan’s Bocconi University, several NGOs including Save the Children are currently working on a project in Somali villages, allowing people to give their opinion on female circumcision anonymously. Smerdon: ‘A randomised controlled trial in these villages will enable us to see the long-term effect of anonymous communication.’

Ambition to contribute

This summer, Smerdon will discuss the third topic in his thesis – Trust and Inequality: Just bad luck? – at an international conference at the London School of Economics.
In his quest for answers, Smerdon - an avid chess player and seven-time member of the Australian delegation to the Chess Olympiad - has used combination of theory, simulations, applied econometrics and lab and/or field experiments. ‘Theoretical models can help us create interesting policy suggestions’, he comments. More relevant and practically applicable research findings can be expected, since he intends to continue the collaboration with the UvA and Bocconi University.
Meanwhile, Smerdon is packing his bags to move back to Australia, where he will be an assistant professor at the School of Economics at the University of Queensland starting in November 2017.
Before commencing with his PhD at UvA, he obtained a John Monash scholarship, which is awarded to Australians 'who demonstrate remarkable qualities of leadership and have the ability to deliver outcomes and inspire others for the benefit of Australia.' Smerdon is proud to have been awarded this scholarship, he says, pointing to the eligibility criterion: ‘Making a contribution to the Australian community in the future.… This criterion matches my goals perfectly.